(3) deposit-currency ratio 
The formula connecting them with the money stock isBills bought—represent bankers’ and trade acceptances bought by Federal Reserve Banks from bill (acceptance) dealers and banks. The Reserve Banks generally buy all prime bills offered at the buying rates they establish.
Bills discounted—represent the amount of Federal Reserve credit member banks obtain through borrowing from Reserve Banks. In 1929–33, two principal forms of borrowing, both known as discounting, were resorted to by member banks in order to maintain adequate reserves: (1) rediscounts of short-term commercial, industrial, agricultural, or other business paper in the member banks’ portfolios; (2) advances to member banks on their own promissory notes, secured by paper eligible for discounting or by government securities.
Continuous annual rate—is a rate of change calculated by assuming continuous compounding. It is the difference between the natural logarithms of a variable at the terminal and initial dates divided by the number of years separating those dates.
Deposit-currency ratio—is the ratio of commercial bank deposits to currency held by the public. The higher this ratio, the larger the fraction of high-powered money in use as bank reserves, and hence the larger the money stock, given high-powered money and the deposit-reserve ratio. The effect on the money stock of a change in this ratio depends on the size of the deposit-reserve ratio.
Deposit-reserve ratio—is the ratio of commercial bank deposits to bank reserves. The higher this ratio, the larger the amount of deposits outstanding for a given amount of reserves. Given high-powered money, an increase in the ratio of deposits to reserves tends to produce a release of currency into public circulation, and hence changes the amount of reserves. The effect on the money stock of a change in this ratio, therefore, depends on the size of the deposit-currency ratio.
Direct pressure,—mentioned on p. 92, footnote 60; is explained on pp. 254–257 [of A Monetary History].
Federal Reserve claims on the public and banks—is the difference between Federal Reserve credit outstanding and Federal Reserve holdings of U.S. government securities.
Federal Reserve credit outstanding—represents principally the loans and investments of Federal Reserve Banks. It is the sum of bills bought, bills discounted, U.S. government securities, and other Reserve Bank credit.
Fiat of the monetary authorities—refers to the fiduciary contributions of the Federal Reserve System and the Treasury to high-powered money. High-powered money is a sum of Treasury obligations and Federal Reserve obligations. Against some of these obligations, the monetary authorities hold nonfiduciary assets, e.g., gold stock assets for gold certificates; Federal Reserve claims on the public and the banks, such as bills discounted or bills bought, for some Federal Reserve notes and bank deposits at Federal Reserve Banks. Against other obligations, the monetary authorities hold fiduciary assets, based on their fiat, e.g., Federal Reserve holdings of government securities for some Federal Reserve notes and bank deposits at Federal Reserve banks.
High-powered money—is currency held by the public, plus vault cash in banks, plus deposit liabilities of the Federal Reserve System to banks. The total is called high-powered money because one dollar of such money held as bank reserves may give rise to the creation of several dollars of deposits. Other things being the same (namely, the deposit-reserve ratio and the deposit-currency ratio), any increase in the total of high-powered money involves an equal percentage increase in the stock of money. Also known as the monetary base.
Implicit prices—is the index of prices obtained by dividing net national product in current prices by net national product in 1929 prices.
Monetary authorities—are government bodies that exercise ultimate power over the determination of the total amount of money in existence. The principal monetary authorities in the United States since 1914 have been the Federal Reserve System and the Treasury.
Money stock—is the seasonally adjusted sum of currency and deposits at commercial banks held by the public; in present Federal Reserve terminology, it is the sum of currency outside banks, adjusted demand deposits, and commercial bank time deposits.
Net national product—is used interchangeably with national income. The measure of net national product is variant III, computed by Simon Kuznets in Capital in the American Economy: Its Formation and Financing, Princeton for NBER, 1961.
Proximate determinants of the money stock—are the three major quantities we distinguish through which any changes in the stock of money (M) must, arithmetically, occur: (1) high-powered money (H); (2) deposit-reserve ratio (3) deposit-currency ratio The formula connecting them with the money stock is
See A Monetary History, Appendix B, for the reasons for selecting these three determinants and for the precise method used to divide a change in the money stock into the fraction attributable to each separately and to interaction between the two ratios.
Reserves of banks—equal high-powered money held by commercial banks, and consist of vault cash in banks plus depositliabilities of the Federal Reserve System to banks. It is not the sum of reserves as viewed by individual banks, which regard their deposits at other banks as reserves. It is the amount that would appear on a consolidated balance sheet of the commercial banks, in which interbank deposits cancel out.
Velocity—is the ratio of net national product in current prices to the money stock. The money stock is the estimated average stock for the time unit (generally, a calendar year) to which the net national product refers.